Unemployment falls but inactivity hits new high

Unemployment in the UK has fallen to its lowest since records began twenty years ago. But the number of economically inactive people has hit a twenty-year high.

Figures from the Office for National Statistics (ONS) show that unemployment fell by 51,000 between June and August to 1.39 million, with fewer people now looking for work than at any time in the past 20 years.

The number of people claiming unemployment benefit also fell fractionally in September to 834,000, a claimant count rate of 2.7 per cent, the lowest since 1975.

But there was a big increase in the numbers of those classified as economically inactive, which includes those who have taken early retirement, the long-term sick, students, and full-time carers. The figure rose by 91,000 over the latest quarter to 7.93 million, the highest since 1984.

In August, a report by the Bank of England suggested that half a million British men of working age had left the workplace over the past decade and were claiming long-term sickness benefit – and so not appearing in the unemployment statistics.

The ONS figures also highlight continuing age polarisation in the UK. In the three months to the end of August, some 49,000 people in the 35-49 age group found jobs compared to falls of 24,000 25-34 year-olds and 18,000 18-24 year-olds who found work.

The number of jobs found by people over the state retirement also fell by 1,000 over the same period, bringing to a halt the steady increase in post-retirement employment that has taken place since the third quarter of 2002.

There was bad news too for manufacturing jobs, which fell to 3.36 million, the lowest level on record. The sector shed 87,000 in the latest quarter, although the ONS said that the rate of decline was slowing.

Average earnings increased by 3.9 per cent in the year to August, unchanged from the previous month.

But the despite the fall in the number of jobless, the number of job vacancies also increased to 662,800 vacancies, up 55,700 on the same period 12 months ago, increasing fears of skills shortages.

Earlier this week, figures from the Chartered Institute of Personnel and Development (CIPD), found that half of employers expect to have increased the total number of employees on their pay roll by the end of the autumn, and almost as many expect to have difficulty finding them.

One in three employers said they would look to recruit workers from overseas to fill the gaps.